Will Fundraising Matter?

News emerged this week about the tremendous success that Governor Romney is having at fundraising for the fall presidential race. Liberals, who are prone to panic, immediately did so. But should they be worried? Both Romney and President Obama will have unprecedented amounts of money to spend on the election. This makes the difference between them less important than the media portrays. Jamelle Bouie (interviewing Professor Brendan Nyhan) explains:

There’s also what Nyhan calls the “marginal benefit of campaign funds”—the more money you spend in an election, the lower the benefit of each additional dollar. With the large amounts that will be spent in this campaign, an extra hundred million dollars on either side won’t make a significant difference. . .

Given the huge amounts that will be raised on both sides, odds are good that money will have a marginal effect on the outcome of this election. The presidency will largely be determined by the fundamentals: unemployment, economic growth, the incumbent’s approval rating. At this point, as I argued yesterday, the fundamentals still favor Obama. Mitt Romney, Karl Rove, and the Republican Party can spend billions; it won’t change the fact that it’s simply unusual for an incumbent president to lose reelection when there’s positive economic growth (even if it isn’t enough to bring the economy to where it needs to be).

Where the money could make a difference is in Congressional races. In that sense every dollar given to Romney (or Obama for that matter) is not as effective as one donated to a Congressional candidate.

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.